Posts Tagged ‘peer to peer lending’
Personal Loans through Peer to Peer Lending: 7.93% APR
Recently we’ve seen banks and credit unions cut back credit lines, raise interest rates and limit new loans to those consumers with perfect credit scores. In most cases, if you’re in need of a loan from a bank, you’re probably ineligible to receive one. The vast majority of even the most well intentioned borrowers have undoubtedly seen their local bank or credit union deny their loan application.
These new restrictions on both loans and credit cards have turned consumers to new mediums in which to seek funds. Peer to Peer lending through Lending Club has provided a new and reliable means for both investors and loan seekers to secure reasonable rates. In fact, since Lending Club’s inception, those seeking loans have been able to secure APR’s as low as 7.93%. Learn More!
Lending Club has countless success stories in which borrowers have been able to secure low rates to:
- Consolidate Debt
- Pay off Credit Cards
- Pay off Car Payments
- Secure Business Loans
- Pay for Special Events (weddings, vacations, etc)
- Secure Personal Loans
Here is how it works: Lending Club is a social lending network that brings together investors and creditworthy borrowers to provide personal loans at rates that are generally better than those offered by traditional banks and credit unions.
- Borrowers apply for a loan with an online profile.
- Lenders (ordinary people, not banks) choose whether or not to lend you money.
- If enough lenders invest money in your loan request, your loan is funded. Usually, the better credit history you have the easier it will be to fulfill your loan request
- You make monthly payments to the network, who distributes your payment to lenders.
Could Facebook.com enter the online banking industry?
An interesting question was posed over at Ecademy.com by writer Thomas Power who asked, “what happens when Facebook becomes an online bank?” The more you read about the relentless snowball effect that is Facebook, the more you realize the potential it has of uprooting entire industries (such as banking).
According to Thomas Power’s estimates, Facebook should catch and pass Google in total number of visitors sometime in 2011 if it stays on it’s current course. And it could reach 1 billion users by 2012! The sheer volume of this user base (and potentially consumer base) could completely rearrange an industry such as banking.
As Thomas Power states, “When you have an audience of that size you can sell them lots of things. You can help them buy better. In fact you can sell them everything negating the need for many existing and costly suppliers and their overheads. Many. Obviously you can offer them discounts through group buying. Cellphones, laptops, cars, flights, holidays, gas, electricity, groceries to name but a few. But then when you think about it you want to manage all your members transactions. All. Everything they buy and everything they sell. And at the end of the year wouldn’t it be nice if you could complete your members tax return negating the need for most of the Inland Revenue and thousands of civil servants. And then how about manage your members patient records so you can get the best deals on pharma products and healthcare too.”
Power then goes on to ask, “so what happens when Facebook becomes a bank?
It starts with a Facebook piggy bank, payment system and credit card. Then it’s a savings account and a loan perhaps for university. What about a mortgage, life insurance, health insurance, car insurance, house insurance and a pension? After all with a billion users these should be the best deals on the planet. Volume speaks price. Low price. This is before you offer your members peer to peer lending like Lending Club giving them better interest and lower risk on their savings.”
Would you bank with Facebook?
Read the entire article here.
Tags: peer to peer lending
Lending Club’s Net Annualized Returns to Investors: 9.65% APY
Lending Club has come into our radar after raising their net annualized returns to their investors by 0.60% APY. A few months ago Lending Club had provided average returns of 9.05% APY, now this number has increased to 9.65% APY.
What is Lending Club?
Essentially Lending Club has set out to eliminate the complexity of the banking system by allowing borrowers and lenders to directly invest from each other through a moderated online platform. Investors open an account and build a portfolio of loans. Investors can select the loans they would like to fund based on how aggressive their investment style is. The investor may also spread their deposit over hundreds of different loans to diversify their savings. Since Lending Club’s inception in 2007 they have provided investors with an annual return of 9.65% APY and were recently given the “Breakthough idea of 2009″ award by Harvard Business Review.
Lending Club Facts:
- As of February 28, 2010, Lending Club has funded over $89,000,000 in loans and provided $6,200,000 in interest to it’s individual investors.
- Lending Club’s approval rate for loan applications sit at roughly 14% (only prime borrows approved), reducing risk for investors.
- Extremely low default rate on loans – less than 3% after 18 months
- Eliminates the high cost of traditional banks to provide you with better rates
Lending Club’s Recognition in the Press:
- “Breakthrough idea for 2009.”
Harvard Business Review - “As major financial institutions stumble or fail completely, online lending sites like Lending Club are on the rise.”
CBS News - “…the increased efficiency of cutting out the banks…”
The New York Times
Lending Club’s average returns rise to 9.60% APY
Since BankVibe first dubbed Lending Club as a lucrative alternative to bank CDs, we have seen their average returns raise from roughly 7.0% APY to a whopping 9.60% APY!
Lending Club is the industry leader for peer to peer lending. They can provide better returns to investors by connecting qualified borrowers with people looking to invest money.
For those of you whom are unfamiliar with Lending Club, here are some crucial facts to consider…
- Since June 2007, Lending Club investors have earned an average net annualized return of over 9.0%.
- The money you invest funds loans made to creditworthy borrowers.
- Many borrowers apply, but less than one in ten are accepted. Lending Club approves only credit worthy borrowers as members.
- They make it easy to build a portfolio based on your criteria. Most lending members spread their investment across tens or hundreds of qualified borrowers.
- Their rates are based on historical trends and the current economic climate. Borrowers pay a fixed rate for the 3-year life of the loan.
- You can reinvest any interest and principal payments each month or withdraw them like an annuity. You can also put your notes up for sale on the “Note Trading Platform”
- Many of their lender members find it rewarding to help others meet their financial goals. Especially in this economic environment, Lending Club members claim to come through when big banks do not.
An alternative to Bank CDs (certificates of deposit)
Peer to peer lending is a relatively new concept for most conservative investors, however even the most conservative of investors should take a second look!
Lending Club, whom Harvard Business Review awarded the “Break Through Business Idea of 2009,” has rewarded investors with annual returns of 9.65% APY since it’s inception in 2007. You may customize your deposit loans based on your investing style – conservative, moderate or aggressive.
Interest rates for Lending Club borrowers start at around 7.5%. Compare that to a typical credit card APR of between 11% and 25%.
From an investor stand-point, the obvious attraction is the interest rate you will receive. Since Lending Club’s beginning, investors have earned an average return of 9.65% APY.
Also keep in mind it only takes $100 to open an account with Lending Club, therefor even skeptical investors can give it a shot without risking too much.
Here are some statistics to monitor if you are a potential investor:
A) Lending Club’s approved loan applications sit at roughly 14% (only prime borrows approved)
B) Extremely low default rate – less than 3% after 18 months
C) Lending Club typically offers a loan amount of 1% above the investors returns (investor receives 7% APY, borrower pays 8% APR)
See reader comments below.
